Oil Jumps After Iran's Navy Claims to Have Blocked US Warship
By Reuters | 04 May, 2026

Brent crude oil jumped over 5% after Iran's navy said it had prevented a US warship from entering the Strait of Hormuz.

A map showing the Strait of Hormuz and a 3D printed oil pipeline are seen in this illustration taken March 23, 2026. REUTERS/Dado Ruvic/Illustration

Brent crude oil jumped over 5% on Monday and the dollar strengthened after Iran's navy said it had prevented a U.S. warship from entering the Strait of Hormuz.

U.S. stock futures, European stocks and bond prices fell.

The pan-European STOXX 600 index was last down 0.5%, while the blue-chip Euro STOXX 50 was 1.2% lower.

Germany's 10-year bond yield DE10YT=RR, the benchmark for the euro zone bloc, was last up 4 basis points at 3.073%. Bond yields move inversely with prices.

Iran's navy prevented "American-Zionist" warships entering the Strait of Hormuz on Monday, state TV reported, while the Fars news agency said two missiles had hit a U.S. warship near Jask on the Gulf of Oman after it ignored Iranian warnings.

Reuters could not independently verify the reports. On social media site X, U.S. Central Command, part of the U.S. Department of Defense, said that no ships had been struck.

IRANIAN WARNING TO US FORCES

Iran's military had earlier on Monday warned U.S. forces not to enter the Strait of Hormuz after President Donald Trump said the U.S. would start helping to free ships stranded in the Gulf by the U.S.-Israeli war on Iran. He provided few details of the plan.

Against this backdrop, Brent crude futures surged over $5.00 to $113.65 per barrel, having recovered from an initial decline during Asian trading hours.

Analysts said, however, high prices were not sustainable longer term because of their impact on demand and the economy.

"The market is being pulled in two opposing directions right now: on one hand, geopolitical risk is pushing oil higher and reviving inflation fears, but on the other, underlying growth especially in the U.S., is clearly softening," said Bruno Schneller, managing partner at Erlen Capital Management, a multi-family office.

This combination was driving some of the big market swings recorded in stocks, bonds and currencies, he added.

MSCI's broadest index of global shares outside Japan still rose, led by gains in Asian stocks with the tech-heavy South Korean stocks closing over 5% higher. Hong Kong's Hang Seng index gained 1.2%.

In Europe, the performance of German carmakers weakened the region's start to the week after Trump said on Friday that Washington would raise tariffs on European cars and trucks.

The pan-European STOXX 600 declined by 0.5% after posting a modest gain last week. Markets in London were closed for a public holiday.

CENTRAL BANKS WARN OF INFLATION RISKS

As another earnings-heavy week began, concerns remained about the scale of artificial intelligence capex investment, now at $751 billion for 2026, $80 billion above estimates at the start of the earnings season and 83% above 2025 spending.

Companies reporting this week include Advanced Micro Devices, Super Micro Computer, Palantir, Walt Disney and McDonald's.

The threat of oil-driven inflation also lifted bond yields in a challenge to equity valuations, while several major central banks had turned hawkish on policy.

Market participants no longer expect the U.S. Federal Reserve to lower rates this year and have priced in interest-rate hikes from the European Central Bank and Bank of England.

Barclays on Monday joined the brokerages that are betting the Fed will not ease rates this year.

Data this week, including Friday's April payrolls report, could shift the Fed outlook.

FOREX MARKETS ON ALERT FOR YEN INTERVENTION

In global forex markets, traders remained on edge over potential Japanese intervention to boost the currency.

The Japanese yen jumped in Asian trading, with the dollar falling sharply before paring some of the losses. Traders are on alert for intervention after some market players believe Tokyo stepped into the market last week.

The dollar was flat against the yen at 156.93, having fallen to as low as 155.7 yen earlier, as traders smarted from possible intervention that analysts thought could have amounted to around $35 billion.

"But fundamentals remain in favour of USD/JPY, meaning USD/JPY will sooner or later recover and force the MoF’s hand again," said Carol Kong, a currency strategist at the Commonwealth Bank of Australia, who added that given the size of Monday's moves, she doubted Japan had interfered.

She attributed the turbulence to choppy trading in holiday-thinned markets.

The euro fell 0.1% to $1.17, while sterling inched lower to $1.3547.

In commodity markets, gold fell more than 1% to $4,551 an ounce. [GOL/]

(Reporting by Nell Mackenzie and Wayne Cole; Additional reporting by Ankur Bangerjee in Singapore; Editing by Thomas Derpinghaus, Dhara Ranasinghe and Barbara Lewis)